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      ASIC: What is an 'over-the-counter (OTC) derivative' under the derivative transaction rules (reporting)?

      The derivative transaction rules (reporting) impose obligations on reporting entities to report information about their transactions and positions in OTC derivatives to a licensed or prescribed trade repository (the reporting obligations): Rule 1.2.5 of the derivative transaction rules (reporting) (Rule 1.2.5 (Reporting)) and RG 251.10.

      As described at RG 251.12, Rule 1.2.4 (Reporting) defines an OTC derivative as a derivative (within the meaning of section 761D of the Corporations Act 2001 (Corporations Act)) that is prescribed by the Minister under section 901B (the Ministerial determination) that is not traded:

      • on a financial market that is:
        • subject to ASIC supervision under Part 7.2A of the Corporations Act (e.g. ASX 24)
        • registered by the US Commodity Futures Trading Commission (CFTC) as a ‘designated contract market’ under s5h of the Commodity Exchange Act 1936 (US), or
        • a ‘regulated market’ as defined in Article 4(1)(21) of the Markets in Financial Instruments Directive 2014/65/EU, or
      • on certain foreign markets (regulated foreign markets) that ASIC has determined under Rule 1.2.4(3) (Reporting) are subject to sufficiently equivalent requirements and supervision, in terms of market transparency and integrity, to those applying to markets supervised under Part 7.2A, ‘designated contract markets’ or ‘regulated markets’ (see the ASIC Regulated Foreign Markets Determination [OTC DET 13/1145]).

      Unless an exemption applies, derivatives (within a class determined by the Minister) traded on facilities that do not fall within the definition of a regulated foreign market, such as swap execution facilities and multilateral trading facilities, are OTC derivatives for the purposes of the derivative transaction rules (reporting) and therefore subject to reporting obligations.

      An exemption has been provided to reporting entities in the form of time-limited transitional relief until 30 September 2023 so that derivatives with characteristics and a method of dealing that meets a generic definition of an exchange-traded derivative and whose financial market is notified to ASIC: see ASIC Corporations (Derivative Transaction Reporting Exemption) Instrument 2015/844.

      (Updated 20 December 2022)